Elizabeth Butler doesn’t have a legal interest in the
assets in the accounts, described in court filings as being
jointly used despite being in Eric Butler’s name, U.S. District
Judge Jack Weinstein ruled in an order filed Oct. 31. Weinstein
agreed with a U.S. magistrate judge’s recommendation that her
efforts to seek an injunction barring the government from taking
all the assets be denied. The money in question totals $736,060,
according to court records.

Elizabeth Butler argued that the accounts should be
considered joint marital property under New York law because a
portion of the funds came from her earnings as an executive
assistant and rent from a jointly-owned apartment in Florida,
according to court filings. Butler had shown that she is
struggling economically to support her child, Weinstein said.

“As in many instances of war, the law here punishes the
innocent at least as much as the guilty,” Weinstein said. “The
court regrets the burden that this decision places on Mrs.
Butler and her family.”

Misled Clients

Eric Butler was convicted by a federal jury in Brooklyn in
August 2009 of intentionally misleading clients about their
investments by telling them that securities they were buying
were backed by federally guaranteed student loans when they were
actually tied to the housing market. Victims’ losses were more
than $1.1 billion, according to the government.

On Oct. 23, an appeals court affirmed Butler’s five-year
prison sentence. The government is seeking the proceeds of the
joint accounts to satisfy a $5 million fine and $250,000
forfeiture order.

The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court,
Eastern District of New York (Brooklyn).